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Maytag Stores Let Shoppers Try Before They Buy
Jun 7, 2004
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Try it, you'll like it. That's the strategy Maytag is pursuing for its latest appliances. The Newton, IA, U.S.-based company is beckoning consumers to literally test drive the products before making a choice.

Under a new retail format at many Maytag stores, potential buyers of washers and dryers can do a load of laundry. Or if the need is a new range, consumers can bake a sheet of cookies first. They can listen to a dishwasher to see whether it really is quiet.

Maytag says the "try-before-you-buy" concept helps close sales. The stores, owned by independent dealers, display the merchandise in "vignettes" of home kitchens and laundry rooms.

Gimmicky or not, it's proved a valuable concept for the home appliances industry where the pace of innovation has risen rapidly for top-line products.

The result has been high-tech—as well as high-priced—goods to satisfy consumer demand for fancier appliances.

But the lines come at a time of mounting competition from Asian imports, increasing pricing pressures and a possible crimp in demand as interest rates creep up.

Traditionally, shopping for appliances is intimidating. The products tend to be shown in bunches where their differences are not easily recognizable or verifiable. And there's no way for the customer to get a sense of how an item works or will look in the home.

That's the image that Maytag wants to change.

"The environment lets us showcase the product," Rian Cain, head of business development at Maytag, says of the 41 stores opened in the past 18 months. "It has worked in terms of sales."

Plans call for 60 Maytag stores by year's end, and another 30 to 40 locations next year.

The "environment" in the Maytag kitchen, for instance, is fully functional: a sink, cooktop, refrigerator, microwave, trash compactor, two ranges, and a built-in double oven.

The stores are about the size of a department store appliance department (on average 6,000-sq-ft), but the atmosphere's more like a mom-and-pop shop. They are located close to venues that a female customer is likely to frequent: toy and book stores, for example.

They are independently run, in some cases by owners of existing appliance stores who want to expand with a separate Maytag location.

"It's an opportunity for Maytag to touch the customer and generate the pull and demand that they may not be able to selling through chain and other appliance stores," says Madison Riley, at retail consultant Kurt Salmon Associates.

Chain appliance sellers, from low-price leader Wal-Mart to home-improvement giant The Home Depot to specialist Sears, are making efforts toward more interesting displays. But size and other limitations won't let them be as elaborate as the new Maytag layouts.

Maytag (which also makes appliance brands Admiral, Amana, Jenn-Air, Magic Chef, and Hoover) is the number three U.S. manufacturer of home appliances. Whirlpool leads, and General Electric is number two.

For Maytag, just trying to stay in the elite three is getting tough.

Analysts say the company's financial resources are "rapidly dwindling" after meeting pension funding needs. It will end 2004 with debt of about U.S. $900 million, down from $971 million last year. But Maytag has begun to outsource more of its production: 8 percent of volume this year versis 5 percent last year, projects Nicholas Heymann, an analyst at Prudential.

"To help conserve capital and still effectively provide a complete line of products, Maytag is rapidly increasing its reliance on overseas sourcing," Mr. Heymann says.

Among appliance industry trends the new stores aim to meet the following:

  • Big tickets—A new Maytag Neptune Drying Center, for example, pairs a regular tumble dryer with an innovative upper drying cabinet for flat and hang drying to minimize shrinkage and reduce wrinkles. Cost: approx. $1,200.

    Likewise, the new front-load washing machine is about $900. These compare with $450 for a traditional top-load washer and another $450 for a tumble dryer.

    "The middle is thinning: You'll buy the opening price point or just go to the high end," says Peter Greene, vice president at marketing researcher NPD Houseworld.

  • Commercialization—This is most noticeable in the proliferation of stainless steel kitchen appliances. The trend has led to a wave of restaurant-style designs in ranges, refrigerators and microwaves.

    "As the economy has improved, there's a growing segment seeking quality, even fashion, in appliances. And they are willing to pay premiums for performance," says Darrell Rigby, head of the global retail practice at Bain.

    New electronic features also are being added. A new side-by-side refrigerator by LG Electronics has a built-in TV. It sells at Best Buy for $3,000. The selling point: Embrace new technology without cluttering the kitchen.

    "We're buying to appeal to customers looking for the latest, most interesting, best features, best values," says George Danko, head of home essentials at Best Buy. "If you look at total units, it's still the less expensive appliances that are selling. But a higher percentage of customers are trading up."

  • Better serving female buyers—The target decision makers for appliances are heavily women. Maytag relied on a focus group of women ages 30 to 65 to design its new stores, and the result is colorful, brightly lit and has a children's play area. This echoes recent efforts by other retailers, from apparel to home-improvement stores, that have made changes to court women.

    And a higher level of customer service is essential. According to a recent study called "Elevated Expectations: The New Female Value Equation," about 83 percent buy more when in a store with good customer service, and 89 percent will choose one similar store over another based on better customer service.

  • Interest rates—Low rates have fueled building of new homes (which need new appliances) and the upgrading of appliances by owners of existing homes.

    "The strong housing market will likely continue in 2004, so unit sales of cooking appliances ... will remain strong," according to a report by the National Kitchen and Bath Association (NKBA). (USA TODAY)

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